Abstract:
Negotiation between the auditor and client is fundamental to the audit
process (Salleh & Stewart, 2012; Gibbins, McCracken & Salterio, 2007). The
auditor is responsible for solving the contentious accounting issues during
the audit process by obtaining audit evidences and justifications from the
client management. Therefore, the quality of financial reporting is depending
on the proper resolution of contentious accounting issues through
negotiations. When auditors and management discussing major issues that
affect financial statement disclosures and the audit report, the auditor’s
ability to resist management pressure is very important because it may
impair the auditors independence judgement (Kleinman & Palmon, 2003;
Goodwin, 2002). Consequently, it is important to understand negotiation
strategy preferred by auditors when they negotiate with their clients. Despite the importance of negotiation skills among auditors, the knowledge
of the preferred strategy, factors and outcomes of negotiation has been
limited. This has motivated the study (i) to examine the negotiation
strategies used by auditors in resolving disputes over accounting issues with
the client management; (ii) to determine the factor that influences the
utilization of the negotiation strategies by auditors; (iii) to determine the
outcome of the negotiations through the usage of negotiation strategies.